Homeowners Are The First Line Of Defense Against Bad Contractors
News stories continue to appear about the financial risks of hiring a bad contractor. The articles describe the same general situation over and over again -- A homeowner hires a bad contractor, the contractor does poor work or runs off with the homeowner's money, the homeowner can't do anything about it and get any money out of the contractor, the homeowner complains to the contractor, nothing happens with that complaint or the contractor ignores it, the homeowner contacts a lawyer, the homeowner finds out that it may not be worth the attorney fees and expenses required to sue a contractor that probably lacks the ability to satisfy a judgment, and the homeowner throws hands up in frustration. Let’s talk about how homeowners can try to protect themselves.
The home owner won’t find much help elsewhere either. Law enforcement will often say that it’s a private civil/contract matter and do nothing. If the contractor’s actually stolen enough money, law enforcement might do something about that. There’s little that the Iowa Attorney General’s office can do in the absence of fraud. Fraud’s difficult to prove; the attorney general’s office likely won’t get very involved in such a situation without a number of people who have been defrauded by the same contractor. The Iowa Legislature hasn’t done anything to help homeowners in these situations so, other than fraud, there’s little else that the attorney general can do because there aren’t any laws to enforce besides the consumer fraud statute.
The elephant in the room that these news stories avoid confronting is that all the criminal prosecutions, money judgments, court orders, restitution orders, and attorney general actions in the world won't do any good for the homeowner financially if the contractor lacks the insurance, money, or nonexempt assets necessary to pay up, which is true for the great majority of contractors. Homeowners thus need to be their own first line of defense against these situations. Potential contractors need to be vetted with background checks and public information searches. Based on my cases, there are usually warnings signs out there if people are willing to look for them. And, to avoid working with a contractor that lacks the financial ability to pay for any issues, homeowners should look for signs of the contractor's business and financial stability.
Things to look for include criminal records for the owner(s), civil court filings, bankruptcy filings, Iowa Secretary of State business records, and real estate and vehicle searches. Be sure to search under both the contractor's personal name and business name. Many contractors change business names when they have problems; try to find old business names that the same person previously operated under that may lead you to red flags. If you want to get ambitious, expand these searches to other states. Really bad contractors will bounce from state-to-state, moving on once they begin having too much trouble in their current state. And look for signs of business and financial stability -- The business's offices, vehicles, online presence, and the professional appearance, dress, and demeanor of owners and employees.
In the end, homeowners have to trust their guts. There are many good contractors out there. Homeowners should move on if they have any misgivings or doubts and instead consider one of the many other dozen or hundreds of contractors that could do the same project for them without headaches, financial or otherwise.
For the most part, the Iowa Legislature seems to view this as an issue of private contracts and business transactions that it’s loathe to interfere with too much. Like most other contractual and business dealings that homeowners engage in, homeowners are expected to be their own primary line of defense. Homeowners need to start doing so and realize that no one but the bad contractor will be required to pay for any issues. Contractors who frequently have problems and who lack the financial ability to pay if issues occur should be avoided at all costs.